the 4 main franchise agreements
There are four different types of franchise agreements to consider when researching a potential franchise opportunity. While many franchise systems offer all four agreement types, not all of them do. Thus, it’s important to understand what type of agreement is best for you and what different types your franchisor offers.
Regardless of the type of franchise you end up choosing, you will need a contract that gives you the right to operate a franchise business based on certain fees and terms. Here are the four most common types of franchise owner’s agreements to consider:
most common franchise agreements
If you’re going to own a franchise, there’s a good chance you will be signing one of the following contracts.
A single-unit franchise agreement grants you the right to operate one franchise unit. This is the most commonly recommended entry-level opportunity for individuals considering the franchise arena. In this scenario, you are considered an owner-operator because you will most likely be very involved in day-to-day operations. This agreement may also include a small radius of exclusive territory to operate within.
In a multi-unit franchise agreement, you have the right to run more than one franchise unit. If a franchise organization has numerous successful multi-unit owners, you have evidence of an operation that is proven to be lucrative. Your role as a franchisee of multiple units usually will involve minimal participation in daily operations. However, there will still be plenty of work to do. Not only will you serve as a general manager with additional administrative support, but you will also be very involved in overseeing every location you own, ensuring they are growing per your plan. This involves more skill and dedicated time compared to a single unit operator.
This agreement grants area developers the right to open a set number of units in a designated area. With this comes a development schedule that details by when each franchise unit should be up and running. As long as the units open according to schedule, the franchisee is granted an exclusive territory that no other franchisees can touch. Your franchise and royalty fees might be lower since you are “buying in bulk.” You will probably be hands-on through the opening of the first unit, but once it is up and running successfully, your focus will switch to real-estate hunting and managerial appointments for the remaining units. While your new units begin developing, you must also ensure that you continue to implement marketing systems so that you will attract new business.
This agreement is simply an area development license on a much larger scale. You will be known as a regional developer, and you will pay for all the same rights as an area developer, but be responsible for a much larger territory. You not only will have access to reduced rates, but you also will have the opportunity to sell franchises to other entrepreneurs for profit. This earns you a percentage of the ongoing royalties paid by franchisees. It’s a huge undertaking, but if done well it’s an opportunity for serious income. Essentially, you would be a mini-franchisor who is responsible for training, supporting, operating, and marketing.
We can help you decide which agreement is best for your overall goals, as well as offer insight into what agreements VaporFi offers. We hope you will consider joining our team with your own VaporFi franchise.